- 3M's potential large legal liabilities in cases involving military earplugs and PFAS contamination continue to grab headlines and worry investors.
- The potential payouts are significant, but I'm more concerned by what I believe is inertia on management's part and an unwillingness to invest more vigorously in growth.
- 3M has a well-earned reputation for excellence, including impressive margins, ROIC, and free cash flow generation, but a reticence to change could mean missing significant growth opportunities in adjacent products/markets.
- 3M shares do look modestly undervalued on my estimate of litigation payouts, but weak near-term growth and margin prospects, and legal uncertainties will likely continue to weigh.
For further details see:
For 3M, Inertia May Be The Bigger Long-Term Threat